{"id":10153,"date":"2022-02-11T10:00:59","date_gmt":"2022-02-11T10:00:59","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=10153"},"modified":"2022-02-26T13:05:36","modified_gmt":"2022-02-26T13:05:36","slug":"assessing-the-economic-effects-of-a-russian-attack-on-ukraine","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/assessing-the-economic-effects-of-a-russian-attack-on-ukraine\/","title":{"rendered":"Assessing the Economic Effects of a Russian Attack on Ukraine"},"content":{"rendered":"\n

Tim H. from Cleveland, OH asks: <\/em>Hello Mitch, I\u2019ve\nbeen getting a little concerned about the Russia\/Ukraine situation spilling\nover into a full-fledged war. Seems like that wouldn\u2019t be a small conflict.\nHypothetically speaking, wouldn\u2019t a new war be a negative for the markets?<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thank you for writing. There is no question that conflict\nbetween Russia and Ukraine is the geopolitical issue of the day, and you are\ncorrect to wonder how geopolitical conflicts may affect sentiment and the\nmarkets. <\/p>\n\n\n\n

I\u2019ll set the stage first for readers, who are no doubt aware of this simmering issue. Russia has amassed some 100,000 troops on the Ukrainian border, which U.S. intelligence believes could trigger a swift invasion anytime in early 2022. The U.S. and allies have prepared a list of sanctions on Russia should they invade, but the possibility of U.S. troops or NATO forces being involved in actual combat seems low (at least today). The sanctions being floated would undoubtedly hurt Russia the most by blocking exports of goods to Russia that have a certain percentage of American content and most impactful by preventing Russia from accessing semiconductors.1<\/sup><\/p>\n\n\n\n

Should You Time the Market?<\/a><\/strong><\/p>\n\n\n\n

Fear\noften leads investors to behavioral traps, such as trying to time the market. <\/p>\n\n\n\n

Study after study shows that the average investor is a poor market timer. Either investors are tempted to invest when the market is doing well or sell when volatility sets in.

Instead of allowing media and fearful headlines to push you to make quick investment decisions, learn about potential solutions with our guide, \u201cHow Market Timing Can Affect Your Retirement Plan2<\/sup>.\u201d This guide seeks to explain these behavioral traps and offers potential solutions. If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, click on the link below to get your free copy:
\u00a0
Download Zacks Guide, \u201cHow Market Timing Can Affect Your Retirement Plan.\u201d<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n

\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad\u00ad____________________________________________________________________________<\/p>\n\n\n\n

Russia does provide about 50% of all gas imports to Europe,\nwhich also puts Europe at risk should sanctions result in tit-for-tat economic\npenalties. But at the same time, curbing exports of natural gas to Europe would\nultimately be another penalty on Russia, which relies on those revenues. In\nshort, I think Russia has the most to lose from an invasion, but that won\u2019t\nnecessarily stop them from taking action. <\/p>\n\n\n\n

As for the capital markets, I think I do not see a\nsignificant impact either way. Russia makes up a tiny portion of the global\neconomy, and corporate earnings would likely feel close to zero impact from\nthis regional conflict. We can also look back to recent history for some\ninsight \u2013 recall that Russia invaded and subsequently annexed Crimea in 2014,\nwhich was then part of Ukraine. That invasion took place in February and March\nof 2014. As readers can see on the chart below, the S&P 500 showed no\nvisible impact from that invasion, and in fact, trended nicely higher\nthroughout the year. <\/p>\n\n\n\n

\"\"
Source: Federal Reserve Bank of St. Louis3<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n

I realize that the\nidea of an invasion, particularly involving Russia, can be unsettling. But it\u2019s\nimportant to think in the context of the global economy and global corporate\nearnings, neither of which I believe will feel an impact no matter the outcome.<\/p>\n\n\n\n

If situations like these are causing you to make investment decisions based on fear instead of data, I recommend reading our guide, \u201cHow Market Timing Can Affect Your Retirement Plan.\u201d4<\/sup> <\/p>\n\n\n\n

This guide seeks to explain emotional and behavioral traps that investors can fall prey to and offers potential solutions to common mistakes that many self-managed investors make.
\u00a0
If you have $500,000 or more to invest and want to learn how you may be able to avoid these mistakes today, get your free copy by clicking on the link below:<\/p>\n","protected":false},"excerpt":{"rendered":"

If its threatened invasion of Ukraine actually happens, the consequences for Russia could be severe. <\/p>\n","protected":false},"author":3,"featured_media":7436,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-10153","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=10153"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10153\/revisions"}],"predecessor-version":[{"id":10203,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/10153\/revisions\/10203"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=10153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=10153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=10153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}